XYZ makes machining as easy as ABC

Contributing editor Steed Webzell talks to Nigel Atherton, managing director of XYZ Machine Tools, about a number of current and future initiatives that are creating even more market differentiation for this progressive and ambitious company.

XYZ Machine Tools has come a long way since its inception in 1984, when Nigel Atherton set up XYZ Systems and Service in Newton Abbot. Working from a 500 sq ft unit, core business back then was machine rebuilding with a specific focus on fitting Acu-Rite digital readout (DRO) systems. However, within two years the company had imported its first machine tools from Taiwan and taken on a 2500 sq ft unit in Tiverton.

“Our big break arrived in 1993, when I discovered ProtoTRAK, a unique control that would revolutionise machine shops undertaking small batch production work,” says Mr Atherton. “As a result of ProtoTRAK, our sales grew from £3 million to £15 million over the next five years. Today we have 20,000 ProtoTRAK machines at 5000 customers.”

The company moved to its current facility in Burlescombe, near Tiverton, in 1998 and the rest, as they say, is history. XYZ Machine Tools has since grown its UK turnover to £32 million, expanded its headquarters several times to reach 100,000 sq ft, and established five satellite showrooms around the UK, plus another that will shortly come on stream in Poland.

Huddersfield is the latest addition to the company’s UK showroom estate. The move followed XYZ’s purchase of its north of England distributor, Elektrameric, back in 2000.

“Over the years we’ve moved away from the distributor model, instead adopting our own sales and service teams,” explains Mr Atherton. “It’s had an enormously positive effect on the business. For instance, back in 2000, we had a distributor in Scotland returning sales of around £200,000 a year. However, in our first year of employing direct, sales climbed to £1.6 million. Today, alongside our own sales team, we also directly employ 20 service engineers, all with stock-equipped vehicles.”

Although Elektrameric had its own premises in Blackburn, XYZ Machine Tools considered this location too difficult access from the northeast of England. Instead, the company sought a central location along the M62 corridor, finding the ideal 5000 sq ft facility in Huddersfield that supports XYZ’s target of ensuring 90% of the country can reach a showroom within two hours.

“We now have UK showrooms in Livingston, Huddersfield, Sheffield [in partnership with Ceratizit UK & Ireland], Nuneaton, Slough and our headquarters in Devon,” says Mr Atherton, “When customers buy a machine from one of our 12 directly employed salespeople covering the UK, they also receive free training at their nearest centre, so the two-hour maximum travel distance is again helpful.”

XYZ Machine Tools currently has distributors throughout mainland Europe, where the company has identified Poland as the location for its first direct subsidiary due to its engineering-based economy and potential for high sales. Currently interviewing for staff, the 3000 sq ft facility in Katowice will open later this year, with the company hatching plans to invest in the establishment of direct sales facilities in further European countries.

Investment levels are also high at the headquarters in Devon, where XYZ Machine Tools recently completed a 1500 sq ft extension to improve office size for its customer service and programming teams, while doubling the size of the canteen and kitchen for on-site staff with improved washroom, locker, WC and shower facilities. Creating a nice working environment is crucial to retaining valuable staff.

Further investments on site include migration to Microsoft Dynamics for all of the company’s ERP (enterprise resource planning) requirements, driving up business efficiency, along with the arrival of innovative biomass system, enhancing energy efficiency. To help reduce energy consumption, as well as the environmental and financial impact of disposing of over 100 tons of wood (pallets) every year, XYZ Machine Tools has installed a Froling TX200 250 kW woodchip biomass boiler with Untha wood-chipper. Feeding a silo that can contain 10 days of chippings, the £180,000 investment is delivering annual savings of around £100,000 as a result of eliminating costs for transport, landfill and gas, as well as a rebate for the energy saved courtesy of the Government’s Non-Domestic Renewable Heat Incentive scheme (now closed to new applicants).

“We’ve also been leveraging our strong cash position to overcome well-documented global supply chain issues, and today I can happily report good stock levels on almost all models,” states Mr Atherton. “This strategy is already paying dividends as we achieved sales of £8 million in the first three months of the current financial year, a 48% rise on sales of £5.4 million in the same period last year. This represents a return to pre-pandemic levels.”

Can this impressive sales performance continue? Well, XYZ Machine Tools is optimistic that the Government’s super-deduction capital allowance scheme, which currently runs until March 2023, will help to underpin business in the coming months. To set out the gains available, spending £100,000 on a qualifying investment means machine shops can deduct £130,000 (130% of the initial investment) when calculating their taxable profits. Deducting £130,000 from taxable profits will save up to 19% (£24,700) on the machine shop’s corporation tax bill, a sizable saving. As a point of note, it is always best to discuss individual circumstances with a qualified tax advisor.

Another factor proven to help sustain sales is the introduction of innovative new products. On this note, XYZ Machine Tools will shortly introduce the new ProtoTRAK TMC (Toolroom Machining Centre) range.

“All of our ProTurn lathes are fully enclosed, but our turret and bed mills are not; they rely on table guarding,” explains Mr Atherton. “However, more customers are looking for improved coolant and chip retention, so they would like an enclosure, similar to a VMC. To meet this demand we can offer the ProtoTRAK TMC range, which includes an automatic tool changer.”

ProtoTRAK TMC features a combination of the proven ProtoTRAK RMX control and the iron frames from four established XYZ vertical machining centre: the LR500, LR750, LR1000 and LR1600 models. Customers can view a ProtoTRAK TMC now and place orders, although significant stock will not arrive until November.

“The market has always been keen on low prices and short deliveries, but this is even more pronounced today, which is where a highly competitive, well stocked business such as ours can help,” concludes Mr Atherton. “By way of example, we’ve had multiple orders this year from major blue-chip and aerospace companies that we’ve never managed to penetrate previously. We won these orders largely because we had stock. However, we’ve since had repeat orders because they like the quality of their XYZ machines, which says everything really.”